KATHMANDU (AFP) - The royal flag was taken down from Nepal's royal palace Thursday as the Himalayan nation celebrated a new ear as the world's newest republic after vote consigning its centuries-old monarchy to the history books and declaring a republic. The country was marking late Wednesday's decision by a Maoist-dominated constitutional assembly with a two-day (Thursday and Friday) public holiday, and King Gyanendra - facing a two-week deadline to leave - was said to be packing his bags. "The royal flag was replaced by Nepal's national flag inside the palace," a palace source said. "The flag has been changed as part of the government decision to implement a republic." In a landmark vote capping a peace accord between the Maoists and mainstream parties, lawmakers voted just before midnight on Wednesday to abolish the 240-year-old Hindu monarchy and establish a secular republic. It also ordered that the main palace in Kathmandu be turned into a museum. Nepal's army, long seen as a bastion of royal support, said it will respect the verdict of the assembly. And according to prominent royal watcher Kishore Shrestha, the editor of the Nepali-language weekly newspaper Jana Aastha, the king was packing up and could move to a royal lodge on the outskirts of Kathmandu on Friday (today). Police baton-charged and tear-gassed a group of around 100 protesters who were trying to plant a flag on a statue near the deposed king's palace, an AFP reporter at the scene said. Pro-republican protesters tried to put a Nepalese national flag on a statue of the ousted king's father around 500 metres from the palace, around which demonstrations have been banned. Police baton-charged the protesters as they tried to climb the statue, and the protesters then pelted the police with stones. Around 500 police were deployed at the scene. At least five people were injured, including one police officer. "It's a great day for Nepal," said Damodar Mainali, 20, a Kathmandu resident celebrating the radical change for the impoverished country. "The new Nepal belongs to people like me." Maoist spokesman Krishna Bahadur Mahara said Nepal was now free of "feudal tradition," and promised "a radical social and economic transformation." Many ordinary Nepalese are delighted to see the back of the dour, unpopular king as well as his son and would-be heir, Paras - notorious for his playboy lifestyle. "There was no development under the monarchy," said Prakash Karki, 26, a Kathmandu businessman. "There will be now that the people will run the country." United Nations chief Ban Ki-moon welcomed the vote, saying Nepalese "have clearly spoken for peace and change." The United States, which continues to list the former rebels as a foreign "terrorist" organisation, urged "forward political developments" in Nepal, US State Department spokesman Tom Casey said in Washington. "Monarchy and Hinduism are necessary so that the country does not fragment," said Hem Bahadur Karki, the head of the World Hindu Federation. Many remain wary of the Maoists, whose loyalists are regularly accused of using violence and intimidation. "Whenever I go out there's a bomb blast, a strike or a demonstration. These are the daily worries," said Kathmandu shopkeeper Seema Pradhan, 25. "I hope they will be able to make things better." Britain sent its congratulations to Nepal on the first session of its constituent assembly after it was declared a republic. In a statement, Foreign Office Minister Lord Mark Malloch-Brown said, "This is another step towards the democratic and stable future that the people of Nepal justly deserve."